I still feel like a relative newbie in the area of personal finances, and investing specifically. I was interested in the topic a long time ago, but my investing efforts really launched about 4 1/2 years ago, when I decided that from now on, I am a Dedicated Investor (thank you very much!).
Since then, I have read dozens of books on the subject, from Benjamin Graham’s “The Intelligent Investor” (very challenging despite helpful commentary from Jason Zweig, who edited the recent edition) to Tony Robbins’ populist “Money: Master the Game” (which I credit with really demystifying the subject and helping me get going); from books on (or by) celebrity “unicorn”* investors like Warren Buffett, Peter Lynch, and Sir John Templeton to books for passive investors, such as “Common Sense on Mutual Funds” by Jack Bogle (r.i.p.) and “All About Asset Allocation” by Rick Ferri.
In addition to these books, I often read investing-related articles and investing-related websites such as portfoliocharts.com. I even get a monthly subscription to “Kiplingers” — thank you wifey 🙂 All in all, I have transformed my knowledge base from basically zero to a place of relative familiarity on the topic.
Overall, I feel gratified to have followed Robert Kiyosaki’s advice from “Rich Dad, Poor Dad,” which is to take on your own financial education (because usually no one else will do it for you!). Most importantly, I now have 4 1/2+ years of personal investing experience.
I would by no means say I am an expert, yet here are some of the big takeaways that I have personally gotten so far:
- Passive index investing is the way to go for most of us mortals. Believe me, I am as inspired by stories the Warren Buffett or Sir John Templeton as anyone else. Yet I am aware of my actual experience and knowledge in this field, and I do not believe that it would be wise right now to put my money at risk trying to pick stocks or beat the market. Of course, I love learning, and I am fascinated by successful stock pickers. Maybe some day my education on the topic will reach a point where I change my approach, but for the time being I am content riding the wave of the market, instead of trying to beat it out.
- It is okay to play it safe…er. For all my optimism about investing in the stock market long-term (especially in the U.S., I admit), I think it is prudent to protect some of one’s accumulated capital in safer instruments, such as bonds, and even cash (for short-term liquidity especially). I subscribe whole-heartedly to the “what helps you sleep at night?” philosophy: one ought to take enough risk to achieve a satisfying amount of growth, but not so much risk that one might freak out, lose sleep, or do something regretful like selling all their equities when the market tanks.
- Calm down, do what feels right for you, be patient. I used to worry about being “behind” as an investor. I read advice about how you should “start to invest 10% or more of your income at age 20,” etc etc and that usually was just very depressing and sucky. I am learning to appreciate my progress and take satisfaction from the process. I believe that if I am enjoying the process, the outcome will also be enjoyable. Plus, it eliminates the need for a time machine!
- Don’t worry about whether you are getting wealthy or not. For most of us, investing is not what drives our wealth on a day-to-day basis. The true engine of our success comes from our career and/or other money-making projects. With sound financial planning, we can then use a portion of that money and invest it. Our investments then have the chance to double, triple, quadruple, more (!) through the power of compounding. Yet on a daily basis, it’s important to temper our expectations so we can enjoy the ride.
- Do what aligns for you (aka be true to yourself). This last item really could be on any topic, in any part of our lives. To thine own self be true! As it relates to investing, I am willing to believe that for any investment (no matter how bad it may seem!), there is someone for whom it really works… because that person is personally aligned with it. Conversely, if someone has a strong risk-aversion or fear of a certain investment, it might not be a great choice for them (unless properly tempered by other investments). In the end, it’s your money… it should go somewhere you can honestly get behind putting it.
*In his book “Money: Master the Game,” Tony Robbins refers to the rare investor who can beat the market year after year, while most money professionals fail to do so, as one of the unicorns. These three investors are at the top of the list.